Bonds in turmoil as low inflation set to become the ‘new normal’

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Something odd is going on in bond markets. At the beginning of the year, with
the US Federal Reserve having made clear it planned to taper its asset
purchases, the assumption was that bond yields, which fall as the price
rises and vice-versa, would go up.

Similar assumptions were being made about UK gilts on the basis that during
the next 18 months the Bank of England is set to start raising interest
rates.

Except that it has not happened. Yields on ten-year US Treasuries have hit
their lowest level for a year, for example. Similarly, the Global Rate Index